Inflation in the USA is on a steady path back to the target

The CPI inflation in the USA in September stood at 2.4 percent y/y. The inflation index has been on a steady downward trend for another month, approaching its target, although the market consensus indicated a drop to 2.3 percent y/y. However, the core inflation has increased to 3.3 percent y/y (consensus 3.2 percent).

In my opinion, the reading in itself does not change much, but rather justifies the actions taken to date. It is clear that inflation is on a steady path back to the target and currently, there are no concerns that it would be otherwise. Nonetheless, interest rate cuts must be balanced to avoid disrupting this state.

Recently, the focus has shifted to the American job market, but last week’s payrolls positively surprised. The FED thus seems to be in a relatively comfortable position in terms of further shaping monetary policy. The base case scenario remains an overall move of 100 basis points this year, meaning two more cuts of 25 basis points.

Bartosz Wałecki, Analyst Michael / Ström Dom Maklerski